Microsoft hiring slows from last year’s record pace

Microsoft today reported employment growth for its recently completed fiscal year that falls short of the record numbers it added the year before. But that earlier growth — a net annual addition of more than 10,000 employees worldwide, or 16 percent — would have been difficult to maintain. And because of that, Washington state’s chief economist said this afternoon that he had already been assuming a slowdown for purposes of his economic modeling.

Microsoft’s worldwide headcount grew by about 10 percent in fiscal 2007, according to the written material accompanying the company’s fourth-quarter and year-end financial results. (See earlier post.) It would put Microsoft’s worldwide employment around 78,000 as of June 30. However, the company hasn’t yet disclosed the specific global number or the rate of hiring in the Seattle region.

Chris Liddell, Microsoft’s chief financial officer, addressed the issue in response to an analyst’s question on the company’s quarterly conference call this afternoon — making it clear that he felt it was important to get the hiring growth under control.

Here’s what he said:

“From my point of view, the good trend that we’re seeing is a slowing of the headcount growth. So I’m certainly keen to see us grow (at) lower rates of headcount growth than we have seen in the last couple of years. And we had got down, on a year-on-year basis, in the last quarter to around 10 percent. Now that’s still relatively high, but relative to, say, our level of revenue growth, I’m much more comfortable with that than the mid-teen levels that we were seeing six to 12 months ago. So headcount growth is in a better shape than it has been, from my perspective.”

Liddell said those “moderated levels” of headcount growth are also assumed in the company’s fiscal 2008 financial projections. The news will probably be welcomed by the anonymous Mini-Microsoft employee blogger and other employees struggling to find parking spaces on the Redmond campus.

But Liddell said the growth rate will vary by division. For example, headcount dropped 1 percent in the PC Windows division last quarter, following Windows Vista’s release. Meanwhile, headcount rose 12 percent in the Online Services Business, where Microsoft is still beefing up for its competition with Google and Yahoo.

Microsoft’s employment growth is a key driver of the Seattle region’s economy. The 10 percent growth rate for fiscal 2007 is still noticeably faster than the company was growing in the early part of the decade. And it wasn’t reasonable to expect the torrid pace of fiscal 2006 to continue, said Chang Mook Sohn, the state’s chief economist, via phone this afternoon.

“It was high,” he said. “We know the growth will continue, but not at the same pace. … It is not surprising news.”